Interim Report Q4/2015 Statkraft AS

Transcription

1 Q4 Interim Report Q4/2015 Statkraft AS

2 Key figures NOK million Change Change From income statement 1) Gross operating revenues, underlying Net operating revenues, underlying EBITDA, underlying Operating profit, underlying Operating profit, booked Share of profit from associated companies and joint ventures Net financial items Profit before tax Net profit EBITDA margin, underlying (%) 2) ROACE, underlying (%) 3) Items excluded from the underlying operating profit Unrealised changes in value on energy contracts Significant non-recurring items Balance sheet and investments Total assets Equity Net interest bearing debt Capital employed ) Total investments Cash Flow Cash flow from operating activities Cash and cash equivalents Currency rates NOK/EUR average rate NOK/EUR closing rate Definitions 1) Underlying items are adjusted for unrealised changes in value for energy contracts and significant non-recurring items, up to and including the operating profit. 2) EBITDA margin, underlying (%): (Operating result before depreciation and amortisation x 100)/Gross operating revenues. 3) ROACE, underlying (%): (Underlying operating result x 100)/Average capital employed (rolling 12 months). 4) Capital employed: Tangible fixed assets + Intangible assets + Non-interest-bearing receivables + Inventories - Payable tax - Other short-term and long-term interest-free debt + Group contribution allocated, not paid. Table of Contents Corporate social responsibility and HSE...2 Market and production...2 Financial performance...4 Segments... 9 Outlook Statkraft AS Group Interim Financial Statements...15

3 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT ROBUST OPERATIONS AND IMPAIRMENT Low fuel price combined with a wet and mild quarter contributed to low Nordic power prices. Challenges in South-East Turkey resulted in suspension of a construction project. In the fourth quarter of 2015, Statkraft achieved an underlying EBITDA of NOK 2846 million, a decrease of NOK 640 million compared with the corresponding period in The quarter showed a net loss of NOK 70 million. Cash flow from operating activities was NOK 4597 million, including positive changes in working capital. The average Nordic power prices were 22 EUR/MWh in the fourth quarter, a decrease of 29% compared with the fourth quarter of Total production was 15.4 TWh which was on par with the same period last year. Reduced hydropower production in Norway was counterbalanced by increased production from new hydropower and wind assets outside Norway. The Group has reduced its investment plan as a result of a revised dividend policy from the Norwegian State. The main changes are that there will be no new investments in offshore wind and some international hydropower projects will be postponed. In the fourth quarter Statkraft sold Småkraft. Furthermore, the last phase of the Björkhöjden wind farm was completed and Statkraft has now finalized the construction of all its Swedish wind farms. The security situation in South-East Turkey has resulted in increased risk related to the Cetin project, and there have been major challenges related to project execution. Statkraft has therefore decided to suspend the majority of the construction works. This has led to an impairment and related costs of NOK 2086 million. Going forward, Statkraft will assess different alternatives for the project. EBITDA underlying NOK million Cash flow from operating activities NOK million

4 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT Corporate social responsibility and HSE Corporate responsibility and HSE Fatalities 1) TRI rate Statkraft 1) 2) Serious environmental incidents Full-time equivalents; Group Absence due to illness, Group (%) ) Includes employees and suppliers in plants where Statkraft owns 20% or more. Third parties (not employees or contractors) are not included. 2) TRI rate: Number of injuries per million hours worked The Group's TRI rate was 5.9 in the fourth quarter. There were no serious environmental incidents during this quarter. Absence due to illness was somewhat higher than in the fourth quarter of One serious incident was reported in the fourth quarter In November, a Statkraft employee and a contractor were injured by a rock fall while inspecting a tunnel in Moglicë, part of the Devoll project in Albania. The accident has been investigated and improvement issues will be initiated. Market and production Power prices and optimisation of power production constitute the fundamental basis for Statkraft's revenues. The majority of Statkraft s output is generated in the Nordic region. Power prices are influenced by hydrological factors and commodity prices for thermal power generation. POWER PRICES Electricity, average monthly system price EUR/MWh Sources: Nord Pool and the European Energy Exchange (EEX) The average system price in the Nordic region was 22.0 EUR/MWh in the quarter, a decline of 29% compared with the same period in The price decrease in the fourth quarter was driven by a strengthened hydrological balance. Forward prices in the Nordic region fell throughout the quarter. The average spot price in the German market (EEX) was 33.2 EUR/MWh in the quarter, a decrease of 5% compared with the same period in Forward prices in Germany fell somewhat during the quarter. The average system price in the UK was 52.0 EUR/MWh in the quarter, a decrease of 9% compared with the same period in The decrease was driven by higher temperatures than normal and falling fuel prices.

5 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT EUR/MWh Change Change Prices Average system price, Nord Pool Average spot price (base), EEX Average spot price (peak), EEX Average gas price, EGT Sources: Nord Pool, European Energy Exchange (EEX) and Eon Gas Trading (EGT). CONSUMPTION AND RESOURCE ACCESS IN THE NORDIC REGION Nordic reservoir water levels % TWh Consumption and output Nordic Nordic consumption Nordic output Net Nordic import(+)/export(-) Source: Nord Pool. Norway Norwegian consumption Norwegian output Net Norwegian import(+)/export(-) The inflow was higher than normal in the period. Total reservoir level in the Nordic region was 118% of normal level. The reservoirs were filled to 81% of capacity (66% in 2014), with a maximum reservoir capacity of TWh at the end of the quarter. In the fourth quarter, a net 3.3 TWh was exported from the Nordic region, compared with net exports of 2.1 TWh in the corresponding period in STATKRAFT S POWER PRODUCTION Statkraft s production is determined by water reservoir capacity and reservoir water levels, access to resources (inflow and wind), the margin between power and gas prices (spark spread) and power optimisation. TWh TWh Production, technology Production, geography Hydropower Norway Wind power Nordic ex. Norway Gas power Europe ex. Nordic Bio power Rest of the world Total production Total production The Group produced a total of 15.4 TWh in the fourth quarter, on the same level compared with the corresponding period in In addition, the Group s district heating production amounted to 0.3 TWh.

6 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT Financial performance NOK million Change Change Key figures Net operating revenues, underlying EBITDA, underlying Profit before tax Net profit THE YEAR 2015 The underlying EBITDA was 16% lower than in The lower net operating revenues were primarily related to the lower Nordic power prices, lower Norwegian hydropower production, deconsolidation of UK wind farms and lower contribution from market operations. The decrease was somewhat offset by acquisitions in Chile and Brazil and new production capacity. Underlying EBITDA is adjusted for unrealised changes in value on energy contracts, which amounted to NOK 609 million compared with NOK 2396 million in Total non-recurring items affecting the operating profit amounted to NOK million. In addition to the impairment in Turkey in the fourth quarter, wind power plants in Sweden were written down by NOK 1750 million in the second quarter as a result of expectations of lower power and el certificate prices in the coming years. Statkraft also had a gain from the sale of Småkraft of NOK 226 million. In 2014 the Group had positive non-recurring items affecting operating profit of NOK 2053 million. The share of profit from associated companies and joint ventures was NOK 683 million in 2015 compared with NOK 661 million in There were negative currency effects in both years, primarily as a result of a weakening of NOK against EUR. Overall, this contributed to a NOK 6262 million decrease in the Group's profit compared with FOURTH QUARTER The quarterly report shows the development in the fourth quarter of 2015 compared with the fourth quarter of 2014, unless otherwise stated. Figures in parentheses show the comparable figures for the corresponding period in GROSS OPERATING PROFIT (EBITDA) UNDERLYING The underlying EBITDA was NOK 640 million lower than in the same quarter in 2014, primarily as a result of lower Nordic power prices, lower Norwegian hydropower production and deconsolidation of an offshore wind farm in the UK. The decrease was partly offset by an acquisition in Brazil.

7 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT OPERATING REVENUES - UNDERLYING NOK million Change Change Net operating revenues, underlying Net physical spot sales, incl. green certificates Concessionary sales at statutory prices Long-term contracts Nordic and Continental Dynamic Asset Management Portfolio Trading and origination (excl. market access Germany and UK - renewable) Distribution grid End user District heating, energy sales Other sales revenues Currency hedging energy contracts Sales revenues Other operating revenues Gross operating revenues Energy purchase Transmission costs Net operating revenues Lower Nordic power prices and lower Nordic hydropower production were the main contributors to the reduction in net operating revenues. Net physical sales were higher than in the corresponding quarter in 2014 as a result of higher volumes within activities where Statkraft offers minor renewable energy producers market access in Germany, UK and Nordics. This contributes to an increase both in net physical spot sales and energy purchase. Revenues from long term contracts in Norway were higher due to positive effects of indexed price adjustments and a weaker NOK versus EUR. There were lower revenues from market activities in the fourth quarter compared to same quarter last year. OPERATING EXPENSES - UNDERLYING NOK million Change Change Operating expenses, underlying Salaries and payroll costs Depreciation Property tax and licence fees Other operating expenses Operating expenses Operating expenses were higher due to increased activity within international hydropower, where new plants have come into operation, and acquisitions in Brazil and Chile. Operating expenses were also higher due to new capacity within wind power, where new wind farms in Sweden have come into operation during A weaker NOK compared to other currencies has also contributed to higher operating expenses.

8 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT ITEMS EXCLUDED FROM THE UNDERLYING OPERATING RESULT Unrealised changes in value on energy contracts and significant non-recurring items have been excluded from the underlying operating profit. The unrealised changes in value are partly due to the Group's energy contracts being indexed against various commodities, currencies and other indexes. NOK million Change Change Items excluded from the underlying operating profit Unrealised changes in value of energy contracts Significant non-recurring items Lawsuit Saurdal concessionary power Pension - scheme change Gain from sale of assets Impairments There was a positive development in the fourth quarter on hedges for sales of wind power in UK due to lower power prices. In addition there was a positive development on long term gas purchase contracts. This was partly offset by a reduced value on long term contracts in Brazil. There was an impairment loss related to the construction of the Cetin hydropower plant in Turkey of NOK 2086 million. This was split into NOK 1297 million as depreciation and impairments and NOK 789 million as other operating expenses. Statkraft gain related to sale of Småkraft was of NOK 226 million. SHARE OF PROFIT FROM ASSOCIATED COMPANIES AND JOINT VENTURES The Group has major shareholdings in the regional Norwegian power companies BKK and Agder Energi, as well as shareholdings in companies outside Norway, where much of the activity takes place through participation in partly-owned companies. NOK million Change Change Share of profit from associated companies and joint ventures International hydropower Wind power Industrial ownership Others Associated companies The increase from International hydropower was mainly caused by operation start at Bajo Frio in SN Power and negative contribution from Desenvix in The decrease from Wind power was mainly caused by last years reversal of impairment in Scira. The increase from Industrial ownership was due to Agder Energi and BKK s sale of shares in Småkraft and positive unrealised value changes on energy contracts in Agder Energi. FINANCIAL ITEMS NOK million Change Change Financial items Interest income Other financial income Gross financial income Interest expenses Other financial expenses Gross financial expenses Currency gains and losses Other financial items Net financial items Interest expenses increased by NOK 141 million, mainly due to lower capitalisation of borrowing costs and an updated estimate of decommissioning costs. Net currency effects in the fourth quarter amounted to NOK 311 million, primarily related to a weakening of NOK against USD and TRY. Weakening of NOK against EUR reduced the positive effect. Other financial items in 2014 included loss on interest rate derivatives and obligations linked to equity instruments.

9 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT TAXES A tax expense of NOK 554 million was recorded in the fourth quarter (NOK 100 million). The increase in tax expense was mainly due to a higher profit/loss before tax, partly offset by lower resource rent tax. RETURN ROACE underlying, last 12 months % ROACE 1) was 3.1 percentage points below that of The decline was primarily related to lower operating profit, mainly due to lower Nordic power prices and lower Norwegian hydropower production. CASH FLOW AND CAPITAL STRUCTURE Cash flow the year 2015 NOK million Long-term debt, redemption profile NOK million Cash flow Cash flow from operating activities amounted to NOK 8639 million (NOK 6898 million). Net income, adjusted for noncash effects, were NOK 6111 million (NOK 4034 million) including changes in short and long term items. The changes in short and long-term items had a positive effect of NOK 4651 million (NOK million). The change in short term items was mainly related to working capital, cash collateral and provision related to impairment in Turkey. Taxes paid were NOK million (NOK million) and dividends received from associated companies and joint ventures were NOK 534 million (NOK 729 million). Net investments 2) amounted to NOK million (NOK million). This was primarily investments in property, plant and equipment totalling NOK million, acquisition of shares in Pilmaiquén in Chile of NOK million, in Desenvix in Brazil of NOK -911 million and divestment of Småkraft of NOK 1337 million. The net liquidity change from financing amounted to NOK million (NOK 3168 million). New debt totalled NOK million (NOK 1917 million), while repayment of debt was NOK million (NOK million). Dividend and group contribution amounted to NOK million, primarily from Statkraft AS to Statkraft SF. Financial structure At the end of the quarter, Statkraft had the following financial structure: Net interest-bearing debt 3) totalled NOK million, compared with NOK million at the beginning of the year. The increase was primarily related to new investments, payment of dividend and debt in acquired companies in Chile and Brazil. The net interest-bearing debt-equity ratio was 28.4%, compared with 21.2% at year-end Current assets, except cash and cash equivalents, amounted to NOK million. Short-term interest-free debt was NOK million. 1) ROACE (%): (Operating profit adjusted for unrealised changes in the value of energy contracts and significant non-recurring items x 100) / average capital employed. 2) Net investments include investments paid at the end of the quarter, payments received from sale of non-current assets, net liquidity out from the Group upon acquisition of activities and repayment and disbursement of loans. 3) Net interest-bearing debt: Gross interest-bearing liabilities bank deposits, cash in hand and similar excluding restricted funds short-term financial investments.

10 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT Statkraft s equity totalled NOK million, compared with NOK million at the start of the year. This corresponds to 49.9% of total assets. INVESTMENTS AND PROJECTS Total investments in the quarter amounted to NOK 3426 million. Maintenance investments and other investments were primarily related to Nordic hydropower. Investments in new capacity were mainly within hydropower developments in Turkey and Albania, as well as wind power developments in Sweden and the UK. NOK mill Maintenance investments and other investments Nordic hydropower Continental energy and trading International hydropower Wind power District heating Industrial ownership Other activities Total Investment in new capacity Nordic hydropower Continental energy and trading International hydropower Wind power District heating Industrial ownership Other activities Total Investment in shareholdings Nordic hydropower Continental energy and trading International hydropower Wind power District heating Industrial ownership Other activities Total Projects in consolidated operations Statkraft's Planned Project Country New capacity (MW) 1) ownership share completion Completed projects in the period Wind power Björkhöjden, phase 2 Sweden % 2015 Q4 Main projects under construction Hydropower Nedre Røssåga, phase 1 Norway - 100% 2017 Q4 Nedre Røssåga, phase 2 Norway % 2016 Q4 Øvre Røssåga Norway - 100% 2019 Q2 Cetin 2) Turkey % 2019 Q1 Devoll - Banja Albania % 2016 Q4 Devoll - Moglice Albania % 2019 Q2 Wind power Dudgeon UK % 2017 Q4 Andershaw UK % 2016 Q4 District heating Moss Norway % 2016 Q4 1) Total for project, incl. partners' share. 2) Currently suspended.

11 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT Segments The segment structure follows the internal management information that is systematically reviewed by corporate management and used for resource allocation and assessment of goal attainment. The segments are Nordic hydropower, Continental energy and trading, International hydropower, Wind power, District heating and Industrial ownership. Areas not shown as separate segments are presented under the heading Other activities. Statkraft AS Group Nordic hydropower Continental energy and trading International hydropower Wind power District heating Industrial ownership Other activities Group items From income statement Gross operating revenues, underlying Net operating revenues, underlying EBITDA, underlying Operating profit, underlying Operating profit, booked Share of profit from associated companies and JV EBITDA-margin (%), underlying N/A N/A Maintenance investments and other investments Investments in new capacity Investments in shareholdings Production Production, volume sold (TWh) whereof hydropower (TWh) whereof wind power (TWh) whereof gas power (TWh) whereof bio power (TWh) Production, district heating (TWh)

12 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT NORDIC HYDROPOWER CONTINENTAL ENERGY AND TRADING NOK million Net operating revenues, underlying EBITDA, underlying Operating profit, underlying Unrealised value changes energy contracts Significant non-recurring items Operating profit, booked Share of profit from associated companies and joint ventures Maintenance investments and other investments Investments in new capacity Investments in shareholdings Production, volume sold (TWh) NOK million Net operating revenues, underlying EBITDA, underlying Operating profit, underlying Unrealised value changes energy contracts Significant non-recurring items Operating profit, booked Share of profit from associated companies and joint ventures Maintenance investments and other investments Investments in new capacity Investments in shareholdings Production, volume sold (TWh) Quarterly financial performance Underlying EBITDA was lower than in the same quarter of 2014, mainly due to lower power prices and lower production. Financial performance for the year Underlying EBITDA was lower than in the same period of 2014, mainly due to lower power prices and also somewhat lower production. Operating costs were stable. Quarterly investments Investments in new capacity were mainly related to Nedre Røssåga and Ringedalen power plants. Highlights in the quarter Naturkraft sent an application to the Norwegian Water Resources and Energy Directorate for dismantling the gas-fired power plant at Kårstø in Norway. Quarterly financial performance Underlying EBITDA was stable compared with the same quarter of Financial performance for the year Underlying EBITDA was lower than in 2014, mainly due to lower results from market activities. Operating expenses were higher mainly due to provisions for an onerous power purchase contract. Quarterly investments Investments in new capacity mainly related to a battery project in Germany. Maintenance investments mainly related to bio assets.

13 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT INTERNATIONAL HYDROPOWER WIND POWER NOK million Net operating revenues, underlying EBITDA, underlying Operating profit, underlying Unrealised value changes energy contracts Significant non-recurring items Operating profit, booked Share of profit from associated companies and joint ventures Maintenance investments and other investments Investments in new capacity Investments in shareholdings Production, volume sold (TWh) NOK million Net operating revenues, underlying EBITDA, underlying Operating profit, underlying Unrealised value changes energy contracts Significant non-recurring items Operating profit, booked Share of profit from associated companies and joint ventures Maintenance investments and other investments Investments in new capacity Investments in shareholdings Production, volume sold (TWh) Highlights in the quarter The security situation in South-East Turkey has resulted in increased risk related to the Cetin project, and there have been major challenges related to project execution. Statkraft has therefore decided to suspend the majority of the construction works. This has led to an impairment and related costs of NOK 2086 million. Going forward, Statkraft will assess different alternatives for the project. Quarterly financial performance The increase in underlying EBITDA compared with the fourth quarter of 2014 was related to the acquisition of Statkraft Energias Renováveis (SKER) in Brazil. Peru contributed positively due to start-up of the Cheves project in combination with positive currency effects. The increase in share of profit from associated companies and joint ventures was mainly due to negative contribution from SKER in 2014 (fully consolidated from July 2015). In addition positive contribution from Bajo Frio in Panama due to operation start up and positive currency effects. Financial performance for the year The increase in EBITDA is mainly due to new business in operation and currency effects. Share of profit from associated companies and joint ventures is negative due to impairment in India in the second quarter, however improved from 2014 due to impairment in Brazil in Highlights in the quarter The Board of Directors decided to adjust Statkraft s investment plan. The main change being that there will be no new investments in offshore wind power. Phase 2 of the Björkhöjden wind farm (126 MW) in Sweden was finalised. Quarterly financial performance The decline in underlying EBITDA was primarily caused by the deconsolidation of the offshore wind farm in the UK and lower Nordic power prices, partly offset by good wind conditions and new production capacity in Sweden. The share of profit from associated companies and joint ventures declined, mainly due to a reversal of previous year s impairment of NOK 341 million in Financial performance for the year The deconsolidation of the UK wind farms had a negative impact on underlying EBITDA and a positive impact on the share of profit from associated companies and joint ventures. Quarterly investments The investments were mainly related to onshore wind farms in Sweden and the UK, as well as the Dudgeon offshore wind farm outside the coast of UK. Quarterly investments Investments in new capacity were mainly related to the hydropower developments in Turkey and Albania.

14 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT DISTRICT HEATING INDUSTRIAL OWNERSHIP 1) NOK million Net operating revenues, underlying EBITDA, underlying Operating profit, underlying Unrealised value changes energy contracts Significant non-recurring items Operating profit, booked Share of profit from associated companies and joint ventures Maintenance investments and other investments Investments in new capacity Investments in shareholdings Production, volume sold (TWh) Highlights in the quarter Statkraft bought 100% of the shares in Gardermoen Energi from Hafslund. Quarterly financial performance EBITDA was higher than in the same quarter in 2014 primarily due to better price and higher volume on waste handling, high utilization of base load, high availability and good fuel mix. Reduced costs and limited use of peak load contributed further to the improvement. Financial performance for the year The increase in EBITDA was primarily due to the same factors as for the fourth quarter. Quarterly investments The investments were primarily related to construction of district heating plants in Moss/Rygge, as well as the development of the district heating grid in existing activities. NOK million Net operating revenues, underlying EBITDA, underlying Operating profit, underlying Unrealised value changes energy contracts Significant non-recurring items Operating profit, booked Share of profit from associated companies and joint ventures Maintenance investments and other investments Investments in new capacity Investments in shareholdings Production, volume sold (TWh) ) Industrial ownership includes the shareholdings in Skagerak Energi, Fjordkraft, BKK, Agder Energi and Istad. The two former companies are included in the consolidated financial statements, while the other three companies are reported as associated companies. Highlights in the quarter BKK and co-operating companies have entered into contracts for the procurement of equipment and installation services for their automatic metering and control system (AMS) projects covering customers. Quarterly financial performance The decrease in EBITDA compared with the same period in 2014 was mainly due to lower power prices. The increase in share of profit from associated companies and joint ventures was mainly due to realised gains from the sale of Småkraft. Agder Energi had positive unrealised gains of energy contracts. Financial performance for the year The increase in EBITDA year to date is mainly due to higher contribution from end user business and higher revenues from long term contracts. The increase was offset by lower power prices and production. The increase from share of profit from associated companies and joint ventures is mainly due to positive unrealised value changes from energy contracts and gain from the sale of Småkraft. Quarterly investments Investments were mainly related to new capacity in the transmission grid.

15 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT OTHER ACTIVITIES 1) NOK million Net operating revenues, underlying EBITDA, underlying Operating profit, underlying Unrealised value changes energy contracts Significant non-recurring items Operating profit, booked Share of profit from associated companies and joint ventures Maintenance investments and other investments Investments in new capacity Investments in shareholdings Production, volume sold (TWh) ) The Other activities segment includes small-scale hydropower, innovation and Group functions. Highlights in the quarter Statkraft completed the sale of Småkraft to Aquila Capital. Quarterly financial performance The increase in EBITDA in the fourth quarter is mainly due to higher income from building projects in smallscale hydropower for external partners. Financial performance for the year The decrease in EBITDA is related to higher operating costs due to increased activities in Group functions as well as negative contribution from currency effects from hedging of energy contracts. Quarterly investments New capacity investments are mainly related to smallscale hydropower. Maintenance and other investments were primarily in office facilities and IT.

16 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT Outlook Low European power prices and a power surplus in the Nordic region have resulted in low Nordic power prices. However, a significant share of the Group's power generation in several markets is sold through long-term power contracts which help to stabilise the Group's revenues. Going into 2016 Statkraft s hydrological resource situation is robust. In several emerging markets there is a rising demand for energy. Based on Statkraft s core expertise, this provides opportunities for value creation within renewable energy. The recent acquisitions in Chile and Brazil and completion of new hydropower plants in 2015 have strengthened Statkraft s position and will result in increased income from the Group s international operations. As a result of a change in the owner s dividend policy, Statkraft has adjusted the investment plan. The main changes are that there will be no new investments in offshore wind and the focus will be on managing positions in offshore wind to maximise the value of existing assets and projects. In addition, some international hydropower projects will be postponed. For European flexible power production, market operations and district heating there are no significant changes, and Statkraft will continue to make investments in order to modernise its ageing hydropower plants in Norway and Sweden. Oslo, 3 February 2016 The Board of Directors of Statkraft AS

17 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT Statkraft AS Group Interim Financial Statements NOK million COMPREHENSIVE INCOME PROFIT AND LOSS Sales revenues Other operating revenues Gross operating revenues Energy purchase Transmission costs Net operating revenues Salaries and payroll costs Depreciation, amortisation and impairments Property tax and licence fees Other operating expenses Operating expenses Operating profit/loss Share of profit/loss from associates and joint ventures Financial income Financial expenses Net currency effects Other financial items Net financial items Profit/loss before tax Tax expense Net profit/loss Of which non-controlling interest Of which majority interest OTHER COMPREHENSIVE INCOME Items in other comprehensive income that recycle over profit/loss: Changes in fair value of financial instruments Income tax related to changes in fair value of financial instruments Items recorded in other comprehensive income in associates and joint arrangements Currency translation effects Reclassification currency transalton effects related to foreign operations disposed of in the year Items in other comprehensive income that will not recycle over profit/loss: Estimate deviation pensions Income tax related to estimate deviation pensions Other comprehensive income Comprehensive income Of which non-controlling interest Of which majority interest

18 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT NOK million STATEMENT OF FINANCIAL POSITION ASSETS Intangible assets Property, plant and equipment Investments in associates and joint ventures Other non-current financial assets Derivatives Non-current assets Inventories Receivables Short-term financial investments Derivatives Cash and cash equivalents (included restricted cash) Current assets Assets EQUITY AND LIABILITIES Paid-in capital Retained earnings Non-controlling interest Equity Provisions Long-term interest-bearing liabilities Derivatives Long-term liabilities Short-term interest-bearing liabilities Taxes payable Other interest-free liabilities Derivaties Current liabilities Equity and liabilities

19 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT NOK million Paid-in capital Other reserves Other equity Accumulated translation differences Retained earnings Total majority Non-controlling interests Total equity STATEMENT OF CHANGES IN EQUITY Balance as of Net profit/loss Items in other comprehensive income that recycles over profit/loss: Changes in fair value of financial instruments Income tax related to changes in fair value of financial instruments Items recorded in other comprehensive income in associates and joint arrangements Reclassification currency translation effects related to foreign operations disposed of in the year Currency translation effects Items in OCI that will not recycle over profit/loss: Estimate deviation pensions Income tax related to estimate deviation pensions Total comprehensive income for the period Dividend and Group contribution paid Business combinations/divestments Capital increase Balance as of Net profit/loss Items in other comprehensive income that recycles over profit/loss: Changes in fair value of financial instruments Income tax related to changes in fair value of financial instruments Items recorded in other comprehensive income in associates and joint arrangements Reclassification currency translation effects related to foreign operations disposed of in the year Currency translation effects Items in OCI that will not recycle over profit/loss: Estimate deviation pensions Income tax related to estimate deviation pensions Total comprehensive income for the period Dividend and Group contribution paid Business combinations/divestments Transactions with non-controlling interest Capital increase Balance as of

20 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT NOK million STATEMENT OF CASH FLOW CASH FLOW FROM OPERATING ACTIVITIES Profit before tax Profit/loss on disposal of non-current assets Depreciation, amortisation and impairments Profit/loss from the sale of business Profit/loss from the sale of shares, and associates and joint ventures Profit from restructuring of SN Power Share of profit/loss from associates and joint ventures Realised currency effect from internal loans 1) Unrealised changes in value Changes in long term items Changes in short term items 1) Dividend from associates Taxes Cash flow from operating activities A CASH FLOW FROM INVESTING ACTIVITIES Investments in property, plant and equipment 2) Proceeds from sale of non-current assets Business divestments net liquidity inflow to the Group 3) Business combinations and asset purchase, net liquidity outflow from the Group 4) Restructuring of SN Power, net liquidity outflow from the Group Loans to third parties Repayment of loans from third parties Considerations regarding investments in other companies 4) Cash flow from investing activities B CASH FLOW FROM FINANCING ACTIVITIES New debt Repayment of debt Capital increase Dividend and group contribution paid Share issue in subsidiary to non-controlling interests Cash flow from financing activities C Net change in cash and cash equivalents A+B+C Currency exchange rate effects on cash and cash equivalents Cash and cash equivalents Cash and cash equivalents 31.12/ ) Unused commited credit lines Unused overdraft facilities Restricted Cash - - 1) Realised currency effects from internal loans are shown on a separate line. Previous periods, these effects have been shown as part of changes in short term items. 2) Investments in the cash flow are NOK 1047 million lower than investments in fixed assets in the segment reporting due to acquisition of assets not paid as of fourth quarter ) Cash received from business divestments are NOK 1796 million whereof NOK 354 million is repayment of loans provided by Statkraft. Consolidated cash in the divested companies are NOK 105 million. 4) Considerations for business combinations are NOK 3218 million. Consolidated cash from these companies are NOK 329 million. Investments in business combinations, asset purchase and investment in other companies are NOK 611 million lower than for investments in other companies shown in the segment reporting. This is mainly due to cash in the aquired companies of NOK 329 million, part of the acquisition cost not yet paid as of fourth quarter of NOK 337 as well as investments by Statkraft Forsikring not presented as investment in the segment reporting of - NOK 55 million. 5) Included in cash and cash equivalents are NOK 420 million related to joint operations as of fourth quarter 2015.

21 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT NOK million Statkraft AS Group Nordic hydropower Continental energy and trading International hydropower Wind power District heating Industrial ownership Other activities Group items SEGMENTS 4th quarter 2015 Operating revenue external, underlying Operating revenue internal, underlying Gross operating revenues, underlying Net operating revenues, underlying Operating profit/loss, underlying Unrealised value change energy derivatives Non-recurring items Operating profit/loss Share of profit/loss from associates and joint ventures Profit/loss before financial items and tax Operating revenue external, underlying Operating revenue internal, underlying Gross operating revenues, underlying Net operating revenues, underlying Operating profit/loss, underlying Unrealised value change energy derivatives Non-recurring items Operating profit/loss Share of profit/loss from associates and joint ventures Profit/loss before financial items and tax Balance sheet Investment in associates and joint ventures Other assets Total assets Depreciations, amortisation and impairments Maintenance investments and other investments Investments in new generating capacity Investments in other companies th quarter 2014 Operating revenue external, underlying Operating revenue internal, underlying Gross operating revenues, underlying Net operating revenues, underlying Operating profit/loss, underlying Unrealised value change energy derivatives Non-recurring items Operating profit/loss Share of profit/loss from associates and joint ventures Profit/loss before financial items and tax Operating revenue external, underlying Operating revenue internal, underlying Gross operating revenues, underlying Net operating revenues, underlying Operating profit/loss, underlying Unrealised value change energy derivatives Non-recurring items Operating profit/loss Share of profit/loss from associates and joint ventures Profit/loss before financial items and tax Balance sheet Investment in associates and joint ventures Other assets Total assets Depreciations, amortisation and impairments Maintenance investments and other investments* Investments in new generating capacity Investments in other companies *Maintenance investments and other investments in 2014 included the addition of Leirdøla power plant of NOK 506 million. The addition was classified under other investments, as it is part of an asset swap that does not generate new capacity for the Group.

22 STATKRAFT AS GROUP FOURTH QUARTER 2015 AND INTERIM REPORT Selected notes to the accounts 1. FRAMEWORK AND MATERIAL ACCOUNTING POLICIES The consolidated financial statements for the fourth quarter of 2015, closed on 31 Desember 2015, have been prepared in accordance with the accounting principles in International Financial Reporting Standards (IFRS) and consist of Statkraft AS and its subsidiaries and associates. The interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting. As the information provided in the interim financial statements is less comprehensive than that contained in the annual financial statements, these statements should therefore be read in conjunction with the consolidated annual financial statements for The interim accounts have not been audited. The accounting principles applied in the interim financial statements are the same as those used for the annual financial statements. 2. PRESENTATION OF FINANCIAL STATEMENTS The presentation in the interim report has been prepared in accordance with the requirements in IAS 34. The schedules comply with the requirements in IAS ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS In applying the Group s accounting principles to the preparation of the interim financial statements, the management has exercised its judgment and employed estimates and assumptions that affect the figures included in the income statement and balance sheet. The most important assumptions regarding future events and other significant sources of uncertainty in relation to the estimates, and which may involve a significant risk of material changes to the amounts recognised in future financial periods, are discussed in the annual financial statements for In preparing the consolidated financial statements for the fourth quarter, the Group s management has exercised its judgment in relation to the same areas where such judgment has had material significance in relation to the figures included in the Group s income statement and balance sheet, as discussed in the annual financial statements for SEGMENT REPORTING The Group reports operating segments in accordance with how the corporate management makes, follows up and evaluates its decisions. The operating segments have been identified on the basis of internal management information that is periodically reviewed by the management and used as a basis for resource allocation and key performance review. 5. UNREALISED EFFECTS PRESENTED IN THE INCOME STATEMENT The table below shows the lines in the financial statements where the unrealised effects appear NOK million Unrealised Realised Total Unrealised Realised Total UNREALISED EFFECTS REPORTED IN P&L Sales revenues Long term contracts Nordic and Continental Dynamic Asset Management Portfolio Trading and origination End user Other sales revenues Eliminations Total sales revenues Energy purchase Net currency effects Other financial items Net gains and losses on derivatives and securities Impairment and gain/loss of financial assets Total unrealised effects